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'Bold and creative' solutions needed for a sustainable, post-pandemic economy – UN News

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During the first in a series of roundtable discussions on responding and recovering better from the global crisis, this one with women economists, he painted a grim picture of acute suffering, saying that extreme poverty and hunger are set to increase drastically. Many healthcare systems are already at breaking point; and a whole generation of children is missing out on education. 

“The pandemic threatens not just to put the 2030 Agenda for Sustainable Development on hold, but to reverse progress that has already been made”, Secretary-General António Guterres said

Building back better

Against the backdrop of his call for an overall rescue package by governments, equivalent to at least ten per cent of the global economy, Mr. Guterres said he had met with the Prime Ministers of Jamaica and Canada, who lead the Group of Friends of Financing Sustainable Development, to identify ways to finance the recovery and build back better.

Some 50 heads of State and Government have stepped forward to lead a joint effort – with UN agencies, governments, financial institutions, private sector creditors and other – to address key challenges, ranging from global liquidity and debt vulnerability, to eroding illicit financial flows. 

He pointed out that developing countries face vastly increased demands for public spending “exactly at the same time” as tax and export revenues, inward investments and remittances, are plummeting. 

“As we craft a comprehensive global response, action on finance must be central”, underscored the UN chief. “If countries lack the financial means to fight the pandemic and invest in recovery, we face a health catastrophe and a painfully slow global recovery”. 

Debt crisis

The world is on the cusp of a widespread debt crisis, the top UN official said, noting that many countries face “an impossible choice” between servicing their debt or protecting their most vulnerable communities and fighting the pandemic.

Explaining that “debt defaults can have devastating social consequences”, he made clear that many countries lack financial market access to enable them to service their debt.

“Beyond the fiscal shock, the COVID-19 crisis has impacted all the components of external finance: direct investment, exports and remittances”, he continued, adding that as developed countries themselves deal with the crisis, official development assistance is also under pressure.  

For recovery and to realize the SDGs, “durable solutions on debt” must be considered “to create fiscal space for investments”, stressed Mr. Guterres.

“Uncertainty and a further retreat to inward-looking policies and protectionism could turn today’s sharp decline into a prolonged period of weak external financing”, the UN chief cautioned.

Moreover, as the pandemic disrupts supply chains and trade, he flagged the danger that some manufacturing will move back to developed countries, further reducing developing countries’ resources, and challenging their integration into the global economy.

“These questions need bold and creative answers” Mr. Guterres upheld. 

Finding solutions

According to the UN chief, “we need the insights and perspectives of all”, including “prominent and innovative” women economists, to create “inclusive, resilient and gender-equal societies” to address the climate crisis and other global challenges. 

“We need concrete, radical and implementable solutions”, spelled out the Secretary-General, voicing hope that the series of roundtables will stimulate new ideas and “a totally different debate in relation to the classic ones we have witnessed in the recent past”. 

Much-need transformation

In imagining “a new global economy in which finance becomes a means and not an end”, Deputy Secretary-General Amina Mohammed noted that external finance “needs to change course”. 

“We need a partnership with financial markets to change the balance and achieve the SDGs”, she said, adding that investments cannot be only about profit at any cost but must “land on the right side of history”.

The transformation must “break the inequality and environmental degradation enchantment that darken our future”, she continued, pushing for a new global economy “based on sustainable consumption and production, on sustainable infrastructure that gives access to all to the opportunities of the future”.

“And we need to do it for the next generations”, concluded the deputy UN chief. “Rebirthing the global economy is an opportunity to empower them to confront the current and looming challenges”.

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Austrian economy might not shrink as much as previously forecast: ONB – TheChronicleHerald.ca

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BERLIN (Reuters) – Austria’s economy could shrink by around 6% this year, the Austrian National Bank on Friday, striking a more optimistic tone than in early June, when it had forecast a 7.2% decline.

It said weekly real-time gross domestic product (GDP) data showed the Alpine republic’s economy was recovering faster than expected.

“As long as we avoid a strong second wave of COVID-19 infections, the collapse in Austria’s economy in 2020 could be less severe than had been expected in our forecast in early June,” the ONB said.

It warned that the risks related to the forecast for a 6% contraction remained clearly to the downside though.

(Reporting by Michelle Martin; editing by Thomas Seythal)

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Japan's spending slump eases as economy reopens, COVID-19 clouds outlook – TheChronicleHerald.ca

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By Leika Kihara

TOKYO (Reuters) – Japan’s household spending fell at a much slower pace in June than in the previous month as the economy re-opened from lockdown measures to contain the coronavirus pandemic, offering some hope of a moderate recovery later this year.

But the recovery was driven largely by the government’s blanket cash payouts to households, which were spent on big ticket items like television sets, personal computers and sofas.

That cast some doubt on the sustainability of the rebound, particuarly as rising COVID-19 infections nationwide have forced the government to request citizens hold off on unnecessary travel and work from home as much as possible.

“The rebound in consumption was stronger than expected, so we may see the economy pick up faster than initially thought,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“But renewed rises in infection numbers are worrying. It’s too early to be optimistic on the outlook.”

Household spending in June declined 1.2% from a year earlier, government data showed on Friday, less than a median market forecast for a 7.5% drop.

It followed a record 16.2% drop in May, when consumers were still heeding authorities’ calls to stay home to contain the pandemic. Those emergency steps were lifted in late May.

Compared with the previous month, household spending jumped 13.0% in June to mark the biggest increase on record as the government’s cash payouts offset a steady drop in regular wages.

The payouts helped push spending on air conditioners up by nearly 30% in June, television sets by 83%, and tables and sofas by two-fold, the data showed.

But inflation-adjusted real wages fell for the fourth consecutive month in June, clouding the outlook for an economy bracing for a prolonged impact from the pandemic.

The fallout from the pandemic has pushed Japan deeper into recession, hitting an economy already reeling from the damage to consumption and exports from last year’s tax hike and slumping overseas demand.

(Reporting by Leika Kihara; additional reporting by Daniel Leussink; editing by Jane Wardell)

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Lebanon's economy was already in crisis. Then the blast hit Beirut – CNN

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On Tuesday, a massive explosion at the city’s port left at least 135 people dead and 5,000 injured. The number of deaths is expected to climb as search-and-rescue efforts continue.
The blast, which also leveled huge swaths of Beirut and displaced 300,000 people, couldn’t come at a worse moment.
In the past year, a breakdown in the country’s banking system and skyrocketing inflation had triggered mass protests. Even before the Covid-19 pandemic hit, the World Bank projected that 45% of people in Lebanon would be below the poverty line in 2020.
“It’s an economic crisis, a financial crisis, a political crisis, a health crisis and now this horrible explosion,” said Tamara Alrifai, spokesperson at the United Nations Relief and Works Agency for Palestine Refugees in the Near East.
Dumpster diving, blackouts and suicides. Lebanon's woes laid bare as crisis deepens
European and Gulf countries have sent aid to help Lebanon manage the fallout from the blast, and the country’s central bank instructed lenders to make zero-interest dollar loans to be repaid over the next five years so people and businesses can rebuild. But it’s expected to fall far short of what the country needs to pull back from the brink, and some donors may be deterred by widespread corruption and mismanagement.
French President Emmanuel Macron, who was mobbed by angry crowds during a tour of devastated Beirut neighborhoods on Thursday, said France would provide medication and food, but not via corrupt officials.
“This aid, I guarantee it, won’t end up in corrupt hands,” he told Lebanese protesters, according to a spokesperson.
Macron told reporters later that France would help organize an international conference to raise funds for Lebanon. He promised “clear and transparent governance, whether it’s French or international” to ensure the money is “directly provided to the local population, the NGOs and teams on site that need it.”

Economy in free fall

The economic situation in Lebanon was grim before the explosion.
The International Monetary Fund last forecast that Lebanon’s economy — beset by soaring food prices, a collapsing currency and Covid-19 — would contract by 12% this year. That’s far worse than the 4.7% average drop in output forecast for the Middle East and central Asia.
The country defaulted on some of its debt in March. And last week, Moody’s cut Lebanon’s credit rating to its lowest rank. It’s now on par with Venezuela.
“The country is steeped in an economic, financial and social crisis, which very weak institutions … appear unable to address,” Moody’s said in a statement. The currency’s collapse and the related surge in inflation create a “highly unstable environment,” it continued.
Lebanon had been looking to secure a $10 billion loan from the IMF, but talks stalled last month.
On Thursday, IMF chief Kristalina Georgieva called for “national unity” to address the country’s deep crisis, and she said the agency is “exploring all possible ways to support the people of Lebanon.”
“It is essential to overcome the impasse in the discussions on critical reforms and put in place a meaningful program to turn around the economy and build accountability and trust in the future of the country,” she added.
The explosion in Beirut, which has been declared a “disaster city,” will only pile more pressure on the economy.
“There is not one apartment in Beirut that wasn’t impacted, not one [business] that wasn’t impacted — whether the storefront [or] the goods,” Lebanon’s Economy Minister Raoul Nehme told CNBC Arabia on Wednesday.
The port where the blast occurred is the nation’s main maritime hub, and 60% of the country’s imports pass through it. Nehme said it has been “practically erased.”
Tourism accounted for nearly a fifth of Lebanon’s GDP in 2018, when two million people visited the country. That sector has suffered another huge hit.
“It’s a disaster for Lebanon,” said Pierre Achkar, head of the Lebanon Hotel Federation for Tourism. He said occupancy rates at the hotels still open had already slumped to 5% and 15% because of coronavirus and political issues.
Achkar told the state news agency NNA on Wednesday that the explosion damaged 90% of the hotels in Beirut.
— Chris Liakos, Nada AlThaher, Schams Elwazer, Barbara Wojazer and Sharon Braithwaite contributed to this article.

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